trial production rose an astounding 15 per cent per annum in 1941-1945, as compared with seven percent per annum in 1917-1918 (44). Unemployment which had been 15 percent in 1940 fell to one percent in 1944 (35). According to Jeffries, "World War II brought . . . unparalleled prosperity, unexpected personal gains, and enormous national power and possibilities" (3).
The United States government financed war costs primarily by borrowings. The war-related costs of WW I were approximately $35M, about one third of which was paid for by higher taxes (Galbraith 26). War costs in WW II were eight times WW I's, $360 billion, 47 percent of which was paid for by taxes (Finding & Thackway 64; & Galbraith 119). A principal consequence of massive government borrowing, the influx of gold from abroad, and higher wages and material shortages was a doubling of retail prices in 1915-1920 (Cohen 194). Inflation was somewhat less in WW II, about 30 percent, due to higher taxes, government price controls and rationing (Finding & Thackway 65).
The administration of President Woodrow Wilson largely neglected preparedness before the United States entered the war. It did manage to draft and train about eight million men, nearly two thirds of whom were belatedly shipped to France and helped turn the tide of the war. Ferrell said "industrial mobilization did not go smoothly in 1917-1918" (113). As Galbraith somewhat overstated the case: "by World War II, there was a fairly rational design for economic mobilization . . .; in the First World War there was none" (24). Nevertheless, the character of the American economy was altered by the creation of a variety of federal agencies which regulated war procurement, production, transportation, food and energy, such as the War Industries Board, the Railway Administration, the Food Administration, etc. The New Deal provided an existing framework of federal regulatory agencies which were greatly expanded during WW I...